Travel giant Thomas Cook has said demand for summer holidays abroad shows no sign of abating, but warned of a competitive and “unpredictable” market.

Boss Peter Fankhauser cheered a “good start” to the financial year as group revenues rose 7% to £1.7 billion in the first quarter to December 31.

The tour operator’s seasonal loss narrowed by £10 million to £42 million in the quarter after its airline was boosted by the collapse of rivals such as Monarch in the UK and Air Berlin in Germany.

Total UK bookings are flat for the winter season and 3% higher for the summer season so far despite hotel price hikes for two of its biggest markets – the Canaries and Spain.

Thomas Cook stock

Mr Fankhauser said the group had “got off to a good start” overall, but warned over a difficult market.

He said: “From all that we see so far, customers’ appetite for a summer holiday abroad shows no sign of slowing down.”

He added that Thomas Cook remained on track for full-year forecasts despite a “highly competitive – and, at times, unpredictable – market”.

Average selling prices are 6% higher for Thomas Cook’s UK holidays across the winter and forthcoming summer seasons.

The group said it continued to see pressure on profits amid a price war in Spain.

It has sought to shift demand back to more profitable destinations Egypt and Turkey following woes in recent years due to terrorist attacks and political unrest.

Its airline arm saw a “particularly strong performance” in the first quarter, with an 8% rise in passengers to 3.5 million in the period, while it has seen a “double-digit rise” in summer 2018 bookings.

The figures come after Thomas Cook announced in December that it is to close 50 UK high street shops by March, putting 400 jobs at risk.